Share This Story  |   Comments (0)

Shares of network gear maker 3Com Corp. [COMS] jumped in early trading Friday after the company announced it will adjourn its scheduled shareholder meeting without a vote on the proposed $2.2 billion buyout by private equity firm Bain Capital LLC and China's Huawei Technologies Co.

The stock was up 20% to $3.49 early in the session, its highest level in a week and a half. The company has a market capitalization of about $1.4 million.
 
Bain and China's top telecom equipment maker, Huawei, withdrew their $2.2 billion bid for 3Com earlier this month after it failed to win approval from the Committee on Foreign Investment in the United States, which reviews corporate deals with foreign buyers.

3Com said Friday it would continue to work with its suitors to construct alternatives that answer the panel's concerns, but said there was no assurance that it would come up with a solution that satisfies the panel, or that the discussions would not lead to a lowered buying price.

Huawei has strong ties to the Chinese government, and lawmakers have expressed concerns that sensitive military technology could be transferred to China through the 16.5% 3Com stake that Huawei would hold. Marlborough, Mass.-based 3Com supplies the U.S. government with some security software, including applications that the U.S. military and intelligence agencies use.

Lawmakers and military and intelligence officials have protested that the business unit, TippingPoint Technologies Inc. has sensitive encryption technology that could end up with the Chinese government because of Huawei's participation.

But Bain and Huawei said earlier this month that they would be willing to sell TippingPoint. The parties knew from the start that the unit could be a problem.
In an amended regulatory filing, 3Com revealed that Bain told it at the outset of their talks that the division "was not a strategic asset in Bain Capital's investment hypothesis ... and that Bain Capital would accordingly bear all risk" of selling the unit.

The shareholders will reconvene on March 7. - Donna Block

Also From Tech Confidential

• Video: Chris Coyne on 'red shoes for the rest of us' and investing beyond the bottom line
• CA provides exit for Benchmark
• 2008 breaks 31-year record for VC-backed IPOs
• Q&A: "We have always been way too arrogant," says RRE's Jim Robinson on VCs
• Video Flashback 2008: Union Square's Fred Wilson on low burn rates

Tech Confidential Home Page

---

Post a comment

Name:

Email Address:

URL:

Remember personal info?

Comments: (you may use HTML tags for style)

Please only click "Post" once. It may take a few moments to process.